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Cheryl Atkison
Hi everybody, Cheryl Atkison here. I hope you enjoy this special from the Archives edition. A Full Measure After Hours. Hi everybody, Cheryl Atkison here. Welcome to another edition of Full Measure After Hours. Today I'm going to try to unravel some of the mystery behind the huge unseen players in the prescription drug system. Pharmacy benefit managers, or PBMs, do they help control drug prices, as they say, keep them low, or actually make medicine more expensive and cause deadly delays? Some of you already know that. Some of my favorite stories to do Take a topic that's hard for a lot of people to understand at first blush, or maybe it isn't well explained in easily accessible places. Well, PBMs are one of those topics. Pharmacy benefit managers, I had long heard them referred to as I did stories over the years about prescription drugs, drug prices, the system, the problems. But when people would try to tell me more or I'd ask questions, it was a little off the main topic at the moment and it seemed really complicated. But I kept the information in the back of my mind. As I came to realize how big and important these organizations have become and how little most of us understand about them, I decided it was important to do a story to focus on them on full measure. So that's what you're going to see on Sunday, December 18th. Today in this podcast, we will hear from a Republican leader in the House, Congressman James Comer of Kentucky, and J.C. scott, who represents the industry. First, Representative Comer gives his view of what PBMs are, what they do, and why they're a problem.
Congressman James Comer
PBMs, or pharmacy benefit managers were created to be like a middleman to try to help negotiate cheaper drug prices. They were supposed to be between the pharmacy and the pharmaceutical companies. So what's happened over time? These PBMs, they were private companies. They've made so much money because they were kind of like the tax collectors in the Bible. They could charge whatever they wanted. They've made so much money, they've started buying into chain pharmacies and mail in pharmacies. They're their own entity, they're vertically integrated, they compete against independent pharmacies and they manipulate the price of drugs. Now, there's no consistency in what a PBM charges for drugs. So when you're talking about trying to make pharmaceutical drugs cheaper and you don't look at PBMs, then you're doing a huge disservice to the American people. And that's what's been happening with Congress in both parties. The PBMs have become so big and profitable, they've started donating a lot of money to both parties. So both parties have been turned into blind eyes. So when they talk about reforming drug prices, they've been given PBMs a pass. When I'm confident that if you want to reform drug prices, the first area you start to reform are the PBMs.
Interviewer
I was trying to think of an analogy that makes sense. Tell me if this one works. Let's say you're trying to buy a car and you say to me, can you negotiate a good price for a car? And I say, sure, but it turns out I'm working for the car company. So how am I really going to negotiate a price that's good for you when my interest is really with a car company?
Congressman James Comer
That's a great analogy. The only difference is they own the car company, Right? They own their own car company even though there are other car companies. And the other analogy would be you have to use that person to negotiate a deal. So you go and you want this Ford at this Ford dealership, but you have to go with the middleman. And they say, well, I know you need a car, but you're going to buy this car over here at the Toyota dealership and this is what you're going to pay for it.
Interviewer
And that happens with drugs every day.
Congressman James Comer
That's what it does with every day. So they also have access to independent pharmacies data. And what we've found in our oversight investigations is that the PBMs have stolen that data. And a lot of independent pharmacies, their customers will get a call from the mail order pharmacy company that's owned by the PBM and say, hey, you can buy this blood pressure drug or this cholesterol drug cheaper from us than you can your independent pharmacy. And that's because the PBM's charging the independent pharmacy more for the drug than they're selling it in their mail order pharmacy. It's something that every member of Congress that has any experience in healthcare knows is a problem. But because they've been so prolific in donating to the parties and the leadership in both sides, they've just kind of left them Alone. Now my committee has started looking into is the Republicans on oversight. We've had probes, we've had roundtables. We're trying to put together a report to use in legislation to pass to reform the PBMs to try to save consumers money. And now the PBMS have started advertising everywhere. You're seeing ads on tv, digital ads on every politico, Roll Call, the Hill and all that. So that's kind of how they operate.
Interviewer
When did PBMs come into being?
Congressman James Comer
That's a great question. They came in about a decade ago and they've just gotten bigger and bigger.
Interviewer
Whose idea was that?
Congressman James Comer
Well, I'm sure somebody like Bernie Sanders who's saying we need to negotiate with Medicare on drug prices. That sounds great, but who's going to do it? Is it the government or are you going to create a private entity to do it? However you do it, it doesn't work out that way.
Interviewer
Is it fair to say that PBMs are there because in theory they would help make consumer prices better, but in fact the system has worked its around to where there's a whole group of people profiting from that, not the consumers.
Congressman James Comer
It is and the PBM should have never been allowed to get into the pharmacy business. That's been a huge conflict of interest. You have a lot of issues there with monopolies and trade and things like that. So I think that the PBMs, if Congress is serious about trying to make drug prices more affordable, they need to start with the PBMs.
Interviewer
Okay, and last question. If this is possible to do from the viewpoint of, let's say a pharmacy trying to buy a medicine or a consumer trying to buy medicine, can you kind of go through the chain of how the PBM comes into play and what they're saying to influence pricing?
Congressman James Comer
So if you're a doctor, it's frustrating because the PBM has to approve the medication. So we heard from oncologists who had people with, you know, with cancer, battling cancer that could not, they could not get this particular cancer drug approved. What was happening was the PBM said we're not going to let you buy the generic because we can make more money on the brand name. So you're going to have to buy the brand name. Well, the cancer patient couldn't afford the brand name and weeks would pass by dealing with the pbm. The PBM is an unnecessary level of bureaucracy.
Interviewer
So it's not your insurance company that's deciding?
Congressman James Comer
No. A lot of times it's the PBMs on the. On the medicine. On the medicine. Now the insurance companies determine the surgeries, but on the medicine, oftentimes it's the pbm. So you go to your independent pharmacy with a prescription from the oncologist, for example, they try to get it. The PBM want to prove it. Instead of doing the, you know, the generic, they want the more expensive drug because the margin's bigger. So it's all about profit. With the pbms, when it was created, they were created to kind of be a broker to help negotiate drug costs for the consumers, but now they work for the company. And I'm a Republican. I'm all about business. I'm about, if you can do it in the private sector, do it in the private sector. But the government has allowed these PBMs to get too big. There are too many conflicts of interest. There are too many horror stories where consumers were gouged by the PBMs, and where the independent pharmacies, they have to pay whatever the PBMs charge. And these PBMs will come back two or three months later and say, you know, we didn't charge you enough for that prescription you filled six months ago. You owe us an extra $10,000. And you've got independent pharmacies in Kentucky that are having to pay the PBMs 10, $20,000 a month. And there's no transparency. Where is it going? In some states, they figured out the PBMs were supposed to be reimbursed in Medicaid, and it was found in states like Ohio and Kentucky. They hadn't been reimbursed in Medicaid at the rates they were claiming they were with the amount of money they were charging the pharmacist. So it's a big, complex middleman that adds bureaucracy and cost to prescription drugs at a time when we need to be focused on making prescription drugs cheaper for consumers.
Cheryl Atkison
Next, we'll hear the other side from an industry representative. Now we hear from Juan Carlos Scott or J.C. scott, president and CEO of the Pharmaceutical Care Management Association PCMA, which represents America's pharmacy benefit managers. PBMs, the companies that we're talking about today.
Interviewer
In the simplest way possible. How would you define pharmacy benefit managers?
J.C. Scott
So pharmacy benefit managers, or PBMs, are hired by those who are paying the bills for health insurance. So your employer, my employer, a Medicare plan, will hire a PBM to manage the prescription drug benefit for the people that they represent. So there's roughly shy of 300 million people with some form of health coverage in the United States. Almost all of them have a PBM working on their behalf. And the core thing that the PBM does is to negotiate with drug manufacturers and with pharmacies to try and deliver the drug benefit at the lowest, lowest cost, most affordable way possible for the patients that a plan sponsor represents.
Interviewer
When did the need for PBMs come about? Because they haven't always played such a prominent role?
J.C. Scott
I would say the need for PBMs has been around for a while, but the value has increased as we have seen the cost of healthcare and the cost of prescription drugs continue to increase. There's always been that core role of trying to bring costs down to make it all more affordable for you and I as individuals and for the people who are paying the bills for our our health coverage. PBMs also do a lot in the care management space, meaning to help you and I as patients to make sure when we're prescribed a drug that it's not going to interact badly with some other drug that we have to help communicate with our doctor's office.
Interviewer
So a company may go to a pharmacy benefit manager, another company, and say, we want to offer really good drug benefits for our employees. What can you do for us? And what would the PBM say as the selling point?
J.C. Scott
Primarily what we see in the marketplace is that the selling point is, is the cost that the PBM is offering to deliver that benefit. So the ability to negotiate deep discounts and savings with the manufacturer, to negotiate savings with the pharmacy and better quality, that's typically the selling point, but not always. Sometimes it could be a unique clinical care program that a PBM offers, or a different type of service interaction that they're looking for. There's a lot of different sizes and types of PBMs, which means employers and others who offer health insurance have a lot of choice when it comes to their pbm.
Interviewer
How does the PBM get paid and how does that not add cost in the system? By putting a middleman there.
J.C. Scott
So the PBMs fundamental role is to bring costs down. They only get rewarded if they are successful and they only get retained if they are successful in meeting that mission of delivering lower cost and more affordable prescription drug benefits. Many times, most of the time, the PBM will be paid through a fee arrangement of some kind. And we can get into a conversation, conversation about how the savings are negotiated and how the plan sponsor or the employer chooses to use them. There are times where the plan sponsor or employer may decide, we just want a fixed rate. We want a guarantee on what we're going to pay for Our prescription drugs pbm, you own the risk, you go out and if you can negotiate a better deal with the manufacturer and the pharmacy, then you will be rewarded through a small percentage of those savings. And if you can't, then you're going to have the financial loss as a result of that. But today in the marketplace we see primarily those fee based arrangements that I mentioned.
Interviewer
How would you summarize what you see as the primary controversy or controversy surrounding PBMs today? What are the complaints you hear?
J.C. Scott
I'd say the primary angst that we hear really boils down to frustration with the cost of prescription drugs. We all, I think, are struggling broadly with the cost of healthcare in this country and specifically with the cost of prescription drugs. Manufacturers in many instances are setting list prices at higher and higher points that are increasingly unsustainable. And employers are frustrated, payers are frustrated, we as consumers are frustrated. And I think that we see some of that frustration manifest in complaints about various stakeholders in the supply chain, including with PBMs. Why are things so expensive and why.
Interviewer
Is that not the fault or why do PBMs in your view, not have a role in that?
J.C. Scott
PBMS do. I would say every stakeholder within the supply chain has a role in trying to address that affordability challenge. Manufacturers, when it comes to the prices that they set, pharmacies, when it comes to the quality of the experience they're providing the patients and consumers and the price that they charge for their services, payers and PBMs in doing a better job in recognizing the needs of the people that they are working for and making that, and addressing the affordability challenge and making the consumer experience better. We all have a piece of it. And I'll say, Cheryl, one of my frustration has been that there hasn't been more dialogue among the supply chain to recognize that challenge and come together to work on it. Instead, we see just a lot of finger pointing here in the political arena.
Interviewer
So what if my personal physician thinks a drug I need to try now, which is not the cheapest drug that the PBM may say could be effective, but the doctor disagrees? What happens when there's a disagreement?
J.C. Scott
So the physician and the patient always have the option to go to the drug that they decide and then the plan sponsor, the employer, however they've designed that plan, can decide if they're going to cover that drug or not, if it hasn't gone through the process that the plan sponsor has set up. So in that instance, you have to pay for it themselves. You have to pay for it yourself. Unless typically, what happens is there's a robust appeal process that is intended to work in quick enough time, depending on the patient's need, so that that can be resolved more quickly, and that's designed to allow the physician to overrule and say, we have tried these others and this is what's going to work best for my patients.
Interviewer
Some members of Congress have talked about stepping in to try to do things like create a firm deadline for a decision to be made on a drug or an appeal. Would the association and your members favor something like that? What is their view on congressional action potential?
J.C. Scott
Generally speaking, I think we would prefer to take an approach where we try to improve on the current system through the use of the electronic tools that you and I talked about a moment ago. How do we make sure that the steps are in place so that everything can happen in real time? I think that's the key to unlocking some of the frustrating individual anecdotes that you've heard.
Cheryl Atkison
One super important part of this equation is, of course, the patients, the people impacted by PBMs, and they're very much a part of this debate. We're going to talk to Gabriella and Shawn Burst. They're a brother and sister and the daughter of a woman who they say was terribly impacted by the system. That includes PBMs.
Gabriella Burst
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Shawn Burst
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J.C. Scott
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Interviewer
It is the story of a woman who fought with all of her might, and unfortunately, the system prevented her from continuing her fight.
What would you say, Sean?
Shawn Burst
I would say you had someone with more hope, more conviction that she'd be saved than any other cancer patient I had ever met, that it was all taken away from her by. By the system.
Interviewer
And, Sean, do you remember hearing your mom first, hearing she was sick, what you were told and did you have high hopes then? Because we hear so often now that a cancer diagnosis isn't necessarily a death sentence anymore, which it's not.
Yeah.
Shawn Burst
What were your thoughts? So the first time she got diagnosed was in 2012, and it was stage two. She had double mastectomy, and the outlook looked very good from there. In 2014, actually, two months before I got married, she got re diagnosed stage four. And the doctor laid it down and he said, you know, if I had. If I had five patients, you know, one of them would be dead after 12 months, another one would be dead after 24 months. And he basically kept going down to 80% of the people will be gone after four years. And he said, there's 20% that'll live five years and on. And my mom, her. We got in the car and I wanted to cry. But her thing was, I'm gonna get. I'm gonna be in the top 20%. I'm gonna get to five years. I'm gonna see you get married. I'm gonna see you have kids. And that was her. That was her whole goal. So her outlook was really positive. She felt like she was gonna beat it. And she actually went into remission, I think about, what, a year and a half later.
Interviewer
She went into remission after doing a CBD treatment. But she. She was in remission, I think six months to a year. She was in remission. She went into remission then she was in remission for almost a year. And then it came back. And when it came back, it just came back with the vengeance.
It was everywhere when you first became aware there was a problem and that there was a thing such as PBMs that could be partly in the way here.
So the initial prescription was fine. The, you know, then the copay came back and it was too high. They got a CO pay card for her, and the insurance said, we're not. We're not going to accept the CO pay card. You have to come through our pharmacy, which means they had to start dealing with the pharmacy benefit managers, the PBMs. They don't have any kind of timeline that they have to get back to you with the response. So the PBMs can take all the time they want essentially to give a response, to respond back to what the doctors are prescribing. And there's nothing that, from what we're understanding is there's nothing that regulates them, so they kind of have free reign to do what they want once the prescription is in their hands. And that's where the issue is. That's where the delay was caused, because they would take days to respond that there was an issue. And then, you know, I think the prescription, from the time the prescription was written until it was filled was like five to six weeks. But the pharmacy benefit managers had the prescription in their hands for 19 days before the prescription was actually shipped.
And you're a middle. They are a middleman. Because you didn't give them the prescription, right?
No. So the doctor gave them the prescription. And we know we were kept updated of the situation by my mother's doctor, Dr. Ub. And. And they were. They, you know, I feel like they were continuously communicating with the insurance companies and the PBMs to try to get this rush through, and there was just no sense of urgency on their end.
Sean, when did you hear there was an issue and start to hear about pharmacy benefit managers and had you ever heard of.
Shawn Burst
So I had never heard of it. I had just. I knew there was. My mom was getting more and more upset as the process went along because she wanted this medicine. She wanted to keep fighting, she wanted to make this Disney World trip. And again, my mom was positive. She thought, and she never was in denial to the possibilities that, hey, I might die. But my mom was somebody that was always full of hope. And she knew I'm just going to keep taking one step forward, one step forward. And then that's when we started to see her hope shake and start to. And eventually shatter and totally break. Was through this, which I know it sounds silly. It's like, well, it's just this medicine, it was at the end of her process, but that's, you know, from the journey I went with her through. There was lots of. There was lots of little hiccups along the way, but this was the one that was the straw that broke the camel's back where I think she finally, you know, because I really think that somebody can will themselves into another six months or eight months or 12 months. And I think we got robbed of. I don't know that my mom would have lived another five years, but I think we got robbed of at least several months with my mom that we could have made memories and done things with. So done things with her.
Interviewer
We're talking about pharmacy benefit managers. What is it you learned that's of interest or might be interesting to other people?
So what we learned is that the pharmacy benefit managers kind of control the medications that come in through the specialty pharmacies with the insurance companies. So they kind of have, like, their own discretion. They don't really answer to anyone. So not only do they not answer to anyone, they're not required to prescribe things or do things in a certain time like timeframe.
Even if a patient is terminal, potentially without the medicine.
No, they still, you know, their processes. And even, you know, we knew that they kept coming back with issues, but it would take days for them to come back that there was an issue, and then it would take days again for them to come back with an issue. But there's zero regulation on PBMs. So the biggest issue is that when the insurance company requires the patient to go through the specialty pharmacy and deal with the pharmacy benefit managers, there's nothing there that kind of. There's no one on top of them at that point injunction, so they can kind of do what they want. There's no one they answer to. There's no regulations in place. There's no timelines in place. There's nothing to say, hey, you guys have to get this done in X amount of times. If you can't, you have to come back to the patient, say, this is a problem, you know, immediately, this is a problem we're coming into. And there's just nothing like that in place right now. So they're kind of allowed to slowly push the prescription through without any kind of urgency. And so with some people, that's fine. They don't need their medication right away. But in some cases, like for our mother, that time delay in them giving her the medication could have cost her months with us. I mean, I think she would have, but it just. It cost her time. Time that she. It took time that she didn't have, and it cost her months, possibly of her life that she didn't get to spend with us. So.
Shawn Burst
Yeah, and I think. I think with my mom's case is. It's unique. But what if there also could be another case where somebody's loved one is dealing with this, and it could be the difference between life and death I've seen very aggressive. My brother in law actually died of cancer and his tumor was doubling in size by the time they found it. If he had that kind of delay in his, he would have been dead. You know, so right. Right away versus, you know, fighting cancer for 18 to 24 months.
Interviewer
What have any ideas or ways to explain what you think might ought to be done or could be done to help resolve some of these issues?
Shawn Burst
Yeah, I think the most important thing is to, is to put some kind of regulation in place to where there's a timeline with they have to respond within 24 hours and that way doctors and patients can make decisions and instead of dragging it out or this is a, you know, here's an issue here and then that they take seven days to respond and you're looking at 19 days before the medicine's even shipped out, four weeks before the medicine's in somebody's hand. I think it's 24 hours to make a decision. 72 hours in someone's hand.
Full Measure After Hours: The Powerful, Unseen Middlemen Impacting Your Drug Prices
Release Date: October 3, 2024
In this compelling episode of Full Measure After Hours, host Sharyl Attkisson delves deep into the intricate and often opaque world of Pharmacy Benefit Managers (PBMs) — the powerful middlemen influencing prescription drug prices in the United States. Drawing from archival content, Attkisson presents a balanced exploration of PBMs by featuring perspectives from both a critical congressional leader and an industry representative, complemented by poignant personal stories from individuals directly affected by PBMs' practices.
Cheryl Atkisson opens the discussion by highlighting the growing influence of PBMs in the prescription drug ecosystem. She emphasizes the complexity surrounding PBMs and their purported role in managing and reducing drug costs, setting the stage for a critical examination.
Interview with Congressman James Comer of Kentucky ([02:24] - [09:43]):
Congressman Comer offers a scathing critique of PBMs, arguing that these entities, originally intended to act as intermediaries to negotiate lower drug prices, have instead become profit-driven behemoths that inflate costs and manipulate the market.
Conflict of Interest and Profit Motive: Comer compares PBMs to "tax collectors in the Bible," suggesting that their ability to "charge whatever they wanted" has led to excessive profits. He points out that PBMs have invested in chain and mail-order pharmacies, creating vertical integrations that disadvantage independent pharmacies ([02:24]).
Lack of Transparency and Political Influence: Highlighting the opaque pricing structures of PBMs, Comer asserts that both major political parties have turned a blind eye to PBMs' malpractices due to substantial political donations from these companies. He states, “When they talk about reforming drug prices, they've been given PBMs a pass.” ([03:41]).
Systemic Issues and Consumer Harm: Addressing the bureaucratic hurdles imposed by PBMs, Comer recounts how PBMs often deny necessary medications for patients, leading to life-threatening delays. He recounts instances where PBMs reject generic drugs in favor of more profitable brand names, thereby increasing costs and endangering lives ([07:12]).
Call for Legislative Action: Comer urges Congress to prioritize PBM reforms as the first step toward genuine drug price reductions. He emphasizes the need for transparency and stricter regulations to curb PBMs' unchecked power ([06:56]).
Transitioning to the industry's stance, Attkisson introduces J.C. Scott, President and CEO of the Pharmaceutical Care Management Association (PCMA), who represents PBMs.
Interview with J.C. Scott ([10:08] - [16:37]):
J.C. Scott provides a defense of PBMs, outlining their intended role in the healthcare system and countering the criticisms presented by Comer.
Role and Value of PBMs: Scott defines PBMs as entities hired by health plan sponsors (employers, Medicare plans) to manage prescription drug benefits. He argues that PBMs are essential in negotiating with drug manufacturers and pharmacies to secure the lowest possible costs for consumers. “PBMs also do a lot in the care management space,” ensuring that patients receive appropriate and safe medications ([11:03]).
Cost Management and Incentive Structures: Emphasizing that PBMs are motivated to reduce costs, Scott explains that PBMs are often compensated through fee arrangements or percentage-based rewards tied to the savings they achieve for their clients. This structure, he contends, aligns PBMs' interests with those of consumers and employers ([12:33]).
Addressing Controversies: When confronted with allegations that PBMs contribute to high drug prices, Scott acknowledges the complexity of the pharmaceutical supply chain. He asserts that all stakeholders, including manufacturers, pharmacies, and PBMs, share responsibility for drug affordability. “Every stakeholder within the supply chain has a role in trying to address that affordability challenge.” he states ([14:20]).
Response to Legislative Proposals: Regarding potential Congressional interventions, Scott advocates for system improvements through technological advancements rather than legislative mandates. He believes that enhancing electronic tools can streamline PBMs' operations and resolve individual cases more efficiently ([16:12]).
To humanize the debate, Attkisson introduces the heartrending story of Gabriella and Shawn Burst, siblings who recount their mother's tragic battle with cancer and the detrimental delays caused by PBMs.
Testimonial from Gabriella and Shawn Burst ([17:04] - [25:51]):
Family Impact: Gabriella and Shawn share how their mother's cancer treatment was jeopardized by PBMs' bureaucratic delays. Despite her initial remission, when the cancer relapsed, PBMs hindered timely access to critical medications. “They can take all the time they want essentially to give a response, to respond back to what the doctors are prescribing.” Shawn emphasizes the lack of urgency and regulation in PBMs' processes ([21:43]).
Emotional and Practical Consequences: The Burst siblings detail how extended delays, sometimes extending weeks, deprived their mother and family of precious time, potentially costing her months of life. Shawn states, “I think we got robbed of at least several months with my mom that we could have made memories and done things with.” ([23:23]).
Call for Regulation: Highlighting the absence of oversight, the Bursts advocate for mandatory timelines for PBM responses to prescription requests. They suggest that enforcing a 24-hour decision window could prevent life-threatening delays. “There's no one they answer to. There's no regulations in place.” Shawn urges for immediate regulatory reforms to protect patients' access to necessary medications ([25:51]).
Through incisive interviews and personal narratives, this episode of Full Measure After Hours sheds light on the pivotal yet hidden role of PBMs in the American healthcare system. While Congressman Comer and the Burst siblings illustrate the adverse effects and ethical concerns surrounding PBMs, J.C. Scott counters by defending their essential function in cost management and healthcare delivery.
The episode underscores the urgent need for transparency, regulation, and bipartisan efforts to address the complexities introduced by PBMs. As drug prices continue to soar, understanding and reforming the role of PBMs remain critical to ensuring affordable and timely access to essential medications for all Americans.
Notable Quotes:
Congressman James Comer ([02:24]): “When you're talking about trying to make pharmaceutical drugs cheaper and you don't look at PBMs, then you're doing a huge disservice to the American people.”
J.C. Scott ([10:15]): “PBMs also do a lot in the care management space, meaning to help you and I as patients to make sure when we're prescribed a drug that it's not going to interact badly with some other drug that we have to help communicate with our doctor's office.”
Shawn Burst ([21:31]): “[There's nothing that regulates them, so they kind of have free reign to do what they want once the prescription is in their hands.]”
Shawn Burst ([25:43]): “[The most important thing is to put some kind of regulation in place to where there's a timeline with they have to respond within 24 hours]”
This episode serves as a crucial resource for listeners seeking to understand the multifaceted dynamics of PBMs and their profound impact on healthcare affordability and patient well-being.